How to get a California Resale Certificate

A resale certificate allows a business to purchase goods or services for resale without paying sales tax. In order to do so, the retailer will need to provide a California Resale Certificate to their vendor. 

Learn more about what a Resale Certificate is, how to get one, and more.

What is a Resale Certificate?

When retailers purchase products to resell, they often don’t pay sales tax to the supplier on the purchase. The sales tax will still be paid, but instead of the retailer paying sales tax, the retailer charges sales tax to their customer on the final value of the merchandise. The collected sales tax is then sent by the retailer to the California Department of Tax & Fee Administration. 

For example, let’s take a electronics store in San Francisco, California. When the store purchases laptops from suppliers to sell in their store, by having a resale certificate, the electronics store owner won’t have to pay sales tax on the transaction. This is because these laptops are bought for the purpose of resale, and sales tax is not assessed at this point.

When a customer comes into the electronics store and buys a laptop, the retailer will add California’s sales tax to the total price of the laptop. The customer pays this sales tax at the point of sale, and the electronics store collects it.

At the end of a specified period, generally each quarter, the electronics store will add up all the sales tax it has collected from its transactions. The store will then send this collected sales tax to the California Department of Tax and Fee Administration. Thus, while the electronics store is responsible for collecting and remitting the sales tax, it is actually the final customer who bears the cost of the sales tax.

The purpose of the certificate is to provide evidence of why sales tax was not collected on a transaction. Similar names for a resale certificate include reseller number, seller’s permit, exemption certificate, wholesale license, or reseller’s license. In order for the supplier to allow the tax-exempt purchase, the seller needs proof the buyer intends to resell the product by providing a valid resale certificate.

The sales tax exemption is only intended to be used for inventory that will be resold and not intended for the tax-free purchase of items used in normal business operations such as paper, pens, etc.

Getting Started

Before a business starts selling products or providing taxable services, they must first get a California Seller’s Permit from the California Department of Tax & Fee Administration. The Seller’s Permit is sometimes referred to as a sales tax permit, sales tax number, or sales tax license.

Related: How to get a California Seller’s Permit

Steps to fill out the California Resale Certificate

A resale certificate can be generated by the buyer or seller, provided their certificate contains the required information. To make things easier, the Department of Tax & Fee Administration has a Resale Certificate (BOE-230) that is available for download to document tax-free transactions. 

Filling out the California Resale Certificate (Form BOE-230) is pretty straightforward but is critical for the seller to gather all the information.

In the case of a sales tax audit, the California Department of Tax & Fee Administration requires the seller to have a correctly filled out BOE-230 Resale Certificate.  Without it correctly filled out, the seller could end up owing sales taxes that should have been collected from the buyer in addition to penalties and interest.  

Step 1 – Begin by downloading the California Resale Certificate Form BOE-230 
Step 2 – Enter the seller’s sales tax permit number
Step 3 – Describe the business activities of the seller
Step 4 – Enter the business name of the seller
Step 5 – Describe the property being purchased for resale.  Be sure to be descriptive and use either an itemized list or a general description.
Step 6 – Enter the name, signature title, address, and phone number of the purchaser

BOE-230 Resale Certificate Fillable Form

California Resale Certificate FAQs